Exam 3 ReviewDr. Mike BradyMAR 3023General Overview of the Exam 3 Content:- Product Conceptso Products: broadly defined as a good, service, idea, or a combination of these.o Be able to explain the difference between a good, service and idea and recognizean example of each.1. Good: A tangible, physical entity2. Service: An intangible, result of application of human and mechanical efforts to people or objects (hybrids)3. Idea: Concept, philosophy, image, or issue o Be able to distinguish between consumer products and business product1. Consumer Product: Purchased to satisfy personal and family needs and are classified according to how buyers generally behave when purchasing them Ex: convenience products, specialty products, shopping products, and unsought products.2. Business Product: Purchased to use for operations, to resell, or to use in manufacture of other products. -Business selling to other business o Be able to explain the product hierarchyo Product Hierarchy: Understand the hierarchy from core products to branded products to augmented products, what each of these are, and examples of each1. Core Products- The physical or intangible service that the customer receives Ex: slide clicker (moves the slides forward) or Publix O’s (based off cheerios)2. Branded Products- The core products plus the characteristics that allow the consumer to alienate it from other similar products. Ex: Company associated with product. (Cheerios)3. Augmented Products- Have characteristics that enhance value beyond that ofthe core or branded product.Ex: Warranty or repair o Be able to explain product management including product mix, product line, product line breadth and product line depth (examples in the slides)1. Product Mix- All the products a company sells 2. Product Line- Depth, breadth-Product Line Breadth-(horizontally) The number of different lines that a company markets. -Product Line Depth- The number of items in a product line. o Be familiar with the product life cycle including the phases and the different types of product life cyclesProduct Life Cycle (PLC)1. Introductory Phase- Efforts to enter market. High failure rates, little competition, and frequent product modifications. 2. Growth Phase- Product becomes more or less successful. Increased rate of sales, entrance of competitors, and prices normally fall. 3. Maturity- Not much change. Sales increase at a decreasing rate, lengthened product lines, heavy promotions, and prices/profits fall. 4. Decline- Market share goes down. Long-run drop in sales and large inventories of unsold items. o Be able to explain how companies extend the PLC1. Selling to new segmentsex: Harley Davidson now selling to women.2. More frequent useex: travel toothbrush3. Encourage more use per occasion Ex: McDonalds food- more for less $4. Promoting more varied useex: Dryer sheets with gnat repellant o Be familiar with repositioning and improvementsEx: Arm and hammer baking soda used now for cleaners and to remove odors from fridges instead of just baking. -Modifications to product formulas or service processes o Understand the less risky alternatives to NPD, what they are, and why they are less risky - New product development (NPD) is risky.Less Risky:1. Line extensions- Product developed is closely related to one or more (successful) products in existing product line but specifically designed to meet a different need.ex: Down market extension- Mercedes started making to B-Class cars Up market extensions- Upgrading liquor bottles 2. Brand extensions- Product developed is not closely related to one or more products in the existing product line.ex: Starbucks now sells ice cream and gum3. Product Modifications- Changing 1 or more of the product’s characteristics (old version usually doesn’t stay in the line)ex: old ipod versions 4. Cost Reduction- (quality modification) Selling products at a lower price or selling them at same price with lower manufacturing costs. 5. Function Modification- For ease of useex: Soup at hand, Lipton tea packets to-go - New Product Developmento Understand the difficulty in developing new products and why they are so likely to fail and what percentage of new products fail-80% of new products fail -Schema: what people think things should look like ex: clear soda was a bad idea because people typically think of soda as dark. o 2 goals for NPD: understanding NPD from: 1. The firm’s perspective: What can the firm produce that matches its competitive advantage? 2. The customer’s perspective: How will the customers react to the product?o Know the 5 steps of developing a new product and their order1. Idea Generation2. Idea Screening 3. Concept Analysis 4. Beta & Market testing5. Product Launcho Understand what each phase of the NPD process consists of o Know the 5 steps and order of the product adoption process1. Idea Generation- Generating new ideasex: Neurofocus found that cheetos lovers actually like the orange mess on their fingers2. Idea Screening- Get rid of the ideas that don’t workEx: Doggie car air conditioner3. Concept Analysis- Analyze in specific way.-Who is the target market?-How much will it cost to produce?-How much will consumer pay for it? (do focus groups)4. Beta & Test Markets Ex: Hardees is testing out a foot long burger and Wendys is testing hotdogs5. Product LaunchEx: Sun Chips came out with a compost bag to “go green”, but people hated it because it was so loud so they went back to the original bag. o Know and understand the 5 different types of product adopters, and which ones a company would like to have as their customers1. Innovators- 1st to adapt to new product. 2.5%2. Early Adopters- Choose new products carefully, help spread word of mouth/ 13.5%3. Early Majority- Adopt just prior to average person. 34%4. Late Majority- Skeptics who adopt new products when they feel it is necessary. (after they see the benefits) 34%5. Laggards- Last to adapt to new product. 16%- Branding and Packagingo Brand: a name, term, design, symbol, or other feature that identifies the marketer’s product as distinct from other marketer’s products.o Understand overall why branding (and packaging) is so important- remember Ralph Lifshitz? ( Ralph Lauren, had to change his name because Lifshitz isn’t marketable) o Understand what a Brand Mark is, what a trademark is, and the difference 1. Brand Mark: The part of a brand that is not made up of words, such as a symbol or a design. Ex: Seminole head2.
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